The thing is, a pay increase should be regularly on the cards for all working humans, not just those who are employed. In the very least, inflation isn’t going to….. deflate. That means that if you’re not growing, you’re shrinking.

Prior to Covid, inflation was around 2% per year…

Now (thanks to the spicy flu), it’s sitting closer to 5%. If you are not increasing your rates by at least 5% each year, you’re losing money. The dollars you earn won’t keep stretching the same way, and eventually you’ll be wondering why you never seem to have enough money.

I know what you’re thinking. Raising your prices is hard. It probably took 7 mud cakes and a casket of cheap wine for you to even land on the prices you charge now. While I’ll never judge someone for eating cake and getting tipsy, you’ve got a secret weapon this time that you didn’t have before:

Me.

Bold, I know, but hear me out…

It’s not about being greedy.

Your skills and abilities have almost certainly grown since the last time you decided on your rates. The ‘you’ who existed back then doesn’t have the expertise that you do now, and you’ve more than earned yourself a promotion.

This isn’t about greed. It’s about receiving an appropriate level of compensation for the value you provide your clients.

Rate increases are just part of good business.

There are only two ways to make more money in business; earn more or spend less. While it’s definitely worthwhile to regularly check-in with your accountant/bookkeeper about your spending, the reality is that it costs money to run a business. That, really, leaves you needing to earn more.

All businesses increase their prices, and regularly. A loaf of bread used to cost one third of what it does now. If prices don’t increase, businesses don’t survive.

Your clients actually expect it (and even appreciate it).

As crazy as this may sound, it’s true. Consumers are used to paying more for things than they used to. In fact, raising your rates in the right way can actually help build trust. It shows that you are improving, evolving, and are even better equipped to solve their problems than you once were.

If your prices stay the same and your competitors increase theirs, your clients may question the quality of what you offer. Most of us understand that a higher price usually means higher quality. If you want to attract clients who are looking for quality over price, make sure your rates reflect that.

You’ll be more invested in improving.

One of the drawbacks to being self-employed, is that there’s nobody above you to crack the whip. The motivation to actively grow and improve has to come from within. When you raise your rates, it almost gives you a jolt of inspiration.

Suddenly you’re aware that by charging more, your clients may be expecting more. You’ll be more likely to upgrade your tools and systems, widen your skillset, and improve the quality of your offerings overall.

Be clear on where you are (and where you’ve been).

The first step in raising your rates is knowing exactly what you charge now, and how you formulate those numbers. Are you working solely off an hourly rate? A price per project? Do you offer retainers and if so, how do you decide on their prices? If it’s time to raise your rates, this information needs to be at the forefront of your mind. Understand exactly what your current prices are, and why.

Work out which business expenses have increased (and by how much).

In business, it really pays to keep an eye on your outgoing costs. It’s so easy to ignore the ‘your subscription is about to become more expensive’ emails, and not take a second glance at your direct debits.

As mentioned earlier, successful businesses increase their prices regularly. This means that you’ll be paying more for things than you once were. Consider which essential expenses have increased, and by how much. This can be anything from your digital subscriptions to your materials, tools, and studio rent.

Hot Tip, if you want help doing this, head over to this blog to pinch my Cut The Fat Expenses Worksheet!

Give your current clients plenty of notice.

Many freelancers worry that increasing their rates will send their current clients running into the arms of the competition. While this has not been my experience, it is important that you notify your clients in the right way. In the very least, provide plenty of notice. Months, if possible. Start your new pricing on an easy-to-remember timeline, like the first day of a new month or the beginning of a new financial year. Provide enough communication that nobody could, justifiably, feel blindsided by the increase.

In the unlikely event that someone does complain, you need to be able to show ample evidence that they were notified. You can even use the lead-up period as an incentive for clients to book sooner rather than later. Highlight that if they book/pay/whatever by a particular date, you’ll honour your current pricing. Use this to your advantage!

Remember that new clients don’t know any different.

It’s only your regular clients who will know that you’ve raised your rates. While they may account for a portion of your income, they likely won’t account for all of it. New clients won’t know that you used to be cheaper. They’ll just accept that these are your rates, and possibly even appreciate why you might be more expensive than your competitors. Remember, you don’t want to be hired because you’re the cheapest.

Revise your pricing method.

If you’re still charging only by the hour, it may be time to consider a new method of pricing. Project pricing can serve you in a multitude of ways (and you can read more about those here), but in the very least, it makes price increases easier to swallow. It’s harder for your clients to compare your new rates with your old when you’re charging per project instead of per hour. Project pricing also eliminates the potential for bill shock because the client knows, up front, exactly what they’ll be paying.